Energy 4 Impact’s Crowd Power initiative launched the first in a series of reports on energy access crowdfunding. Crowd Power: Mapping the Market for Energy Access reveals crowdfunding for energy access is a niche market segment with only $3.4 million raised for individuals, charities, NGOs and social enterprises in Africa and Asia in 2015.
In 2015, there were approximately 2,000 energy access campaigns funded, with an average campaign size of $1,725.
Proceeds from campaigns are largely utilised to support entrepreneurs and SMEs operating in Sub-Saharan Africa, particularly in Kenya. The top 5 Sub-Saharan countries for crowdfunding in 2015 are Kenya, Ghana, Tanzania, Uganda and Nigeria, respectively. Almost $1.5 million was raised for projects and entrepreneurs in Kenya alone.
Debt campaigns dominate this market segment and account for 75% of the total raised for energy access from the crowd - $2,538,782. Much of this activity is in the form of microfinance loans and Kiva accounts for the majority of these.
Our researchers identified a number of changes to microlending platforms operations in 2015, highlighting the difficulties of operating in developing markets. These include the closure of Kiva Zip in Kenya and the decision by Danish debt platform, MYC4, to halt lending in Kenya following allegations of fraud at one of their partner organisations.
The report suggests the segment could be poised for change as regulatory conditions enable the development of debt and equity campaigns, and investors are drawn to triple-bottom line returns offered by platforms. In early 2016 we saw two record-breaking equity campaigns funded on Crowdcube, raising over $2 million combined. Trine, a Swedish equity platform investing in solar distribution businesses in Africa and Asia also launched at the beginning of the year. They have since launched and funded four campaigns in Kenya and Uganda.
Crowd Power: Mapping the Market for Energy Access includes an interview with SteamaCo, a tech start-up based out of Nairobi, which announced this week that they raised over $900,000 seed capital from institutional investors and angels. In their early days, SteamaCo raised $10,000 in grant funding on Indiegogo to pilot a new business model.
The report highlights the limits of crowdfunding, particularly as companies grow and become more capital intensive, but also notes the multifaceted purposes of crowdfunding of which financing is but one.
The series of reports is part of a wider programme – called Crowd Power – established by Energy 4 Impact in 2015, which will run through to March 2018.